Student loan consolidation is when you gather up all your student loans and hand them over to one company that charges you one monthly rate. A great benefit of this is a lower monthly rate.
Some Benefits-
Getting a lower interest rate is only one of the benefits of consolidating. Here are some more of them: - You can stop writing 5 different checks: Consolidating simplifies your finances by allowing you to write only one check instead of several checks. - Smaller fee: Find a lender that will charge you a lower monthly interest rate and let them consolidate your loans. - Raise your credit score: When you choose to consolidate, your lender pays off your old debts and unite them to generate one new loan. Since your old loans were repayed, your credit history looks better. - Lock in low rate: When you consolidate your interest rate is locked in. This protects you from future increases.
Consolidation loans are great because they are easy to get. You don't need to be employed or have collateral or a cosigner to consolidate your loans. You don't even need good credit!
Disadvantages Before you run off and consolidate your loans, consider the following. Every choice generally has a downside. Check out all the pros and cons of consolidation before you do it. Below are a couple disadvantages you ought to think about:
- Interest rates fall every now and then. If you chose to consolidate, your higher rate will be locked in. - As soon as consolidation you can't unconsolidate. - The consolidated loan will have new terms and conditions that your other loans didn't. - If you choose to extend the life of the loan you will wind up spending more (in interest) than you would have.
Now that you know the positive and negative aspects of consolidation, you should find out whether or not you're eligible for one of these loans. To qualify for federal student loan consolidation, there are a few requirements. You have to owe more than $10,000 in outstanding federal student loans. You also must be finished with school or taking less than 6 credit hours and attending classes. Last but not least, any defaulted federal student loans must be repaired before consolidating them.
Elise Fisher loves writing articles that help college students find ways to pay for all the many expenses college brings. In addition to this, she has created a website that helps college students understand everything they need to know About Student Loans. Make sure you visit the Student Loan Consolidation page.
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